24 June 2011
Top 10 global acquisitions by Indian companies
Indian business has evolved over the years which have instigated them to go on quest for foreign firms. Until a couple of years back, the news of Indian companies acquiring American-European entities was very rare. However, this scenario has taken a U turn. Nowadays, news of Indian companies acquiring foreign businesses is more common than the other way round. Now India stands as one of the global players.
The new acquisition trend is supported by the buoyant Indian economy, favorable government polices and the extra cash that our Indian corporate are banking on. From Azerbaijan to Australia and U.S. to UAE, India has witnessed a spurt in the mergers and acquisition activity expanding the footprint of Indian companies on the global orbit.
"Indian companies have realized the competitive advantage of having large operations. That's why many companies are acquiring outside India and transmit service piece of the business here," says Rajiv Memani, director Ernst & Young who has helped several Indian acquisitions this year.
What's propelling the foreign flow? "Indian companies have come out of the pain, focusing on productivity and profitability. Top-line companies are cash-rich. The big boost has come with financial reforms and a strong rupee," says Ajay Khanna, CEO, Indian Brand Equity Fund.
The quest began when Tata Tea took over a company twice its own size, Tetley Tea in 2000. From 2003 onwards, the trend of taking over other companies by Indian companies gained substantial pace. Let us now check out some valuable global acquisitions done by Indian companies.
The biggest and the one which is called the father of all acquisitions in India, is Tata Steel acquiring Anglo-Dutch firm Corus Group in 2006 to create the fifth largest steel company of the world. The deal was worth $7.6 billion ( 36,650 crore).
Aditya Birla Group's Hindalco Industries, India's largest non-ferrous metals company, acquired the Canada based firm Novalis in an all-cash transaction for $6 billion.
In 2008, there was a huge earth quake in the automobile market when Tata acquired Britain's most famous automobile manufacturers Jaguar and Land Rover, in a $2.3 billion deal with Ford, their American owners.
Subhash Chandra's Essel Packaging (EPL) acquired the Swiss tube packaging major Propack, and joined hands to become the world's largest in laminated tubes.
In 2006, Ranbaxy Laboratories(RLL) created quite a stir when it announced the acquisition of 3 drug-makers in Europe, all within a week's time. Allen S.p.A, a division of GlaxoSmithKline (GSK) in Italy, Romania's largest independent generic drug producer Terapia and drug maker Ethimed NV in Belgium.
In 2007, Pharmaceutical and biotechnology major Wockhardt bought the fourth largest independent, integrated pharmaceutical group in France, Negma Laboratories. At a deal of $265 million, Wockhardt became the largest Indian pharmaceutical company in Europe with more than 1500 employees based in the continent.
Bennett Coleman & Co, India's largest media group and the holding company of the Times of India group, bought Virgin Radio in the UK in a $53.2 million (Rs 445cr approx) deal with SMG Plc. in 2008.
Mahindra & Mahindra acquired 90 percent stakes of Schoneweiss, a leading company in the forging sector in Germany. The deal took place in 2007, and consolidated Mahindra's position in the global market.
Sterlite Industries, a part of the Vedanta Group signed an agreement regarding the acquisition of copper mining company Asarco for $ 2.6 billion in 2008. The deal surpassed Tata's $2.3 billion deal of acquiring Land Rover and Jaguar. After the finalization of the deal Sterlite would become third largest copper mining company in the world.
A robust economy fueling the demand for natural resources, increasing domestic competitive pressures, and changing economic realities are encouraging Indian companies to seek acquisitions.Developed economies like the U.S. are attractive for Indian companies because of their natural resources, large consumer markets, transparent business processes, robust legal environment, advanced technologies, skills, and knowledge capital. Moreover, as the markets in these economies tend to be mature and saturated, it often proves difficult for Indian companies to gain market share without acquisitions.
at 10:34 AM